P&G pumps up Target sales

May 30, 2012

Target this week featured collection of Procter & Gamble’s leading brands under the auspices of a “summer stock-up” sale that offered purchasers of three items a $10 gift card.

Featured brands included Tide, Bounty, Bounce, Downy, Swiffer, Charmin and Puffs. The pack sizes were large, but then receiving a $10 gift card for buying three eight packs of Puffs at $8.99 is nothing to sneeze at. In fact, the $10 gift card equates to a 37% reduction in the price since shoppers are likely to apply the card to future purchases they would likely make at Target anyway. The price reduction is further magnified by those who use coupons or participate in Target’s REDcard Rewards program, which offers an additional 5% savings.

Even on more expensive items the savings are material. For example, a 150-ounce jug of Tide for $17.99, a Swiffer WetJet starter kit for $18.99 and a 36-count Charmin for $17.99 totals $54.97. The purchase price effectively subsidized by $10, a shopper sees an 18.2% savings that again could be even more substantial for those with a high face value coupon for each item and the 5% REDcard Rewards discount.

Target has been doing these gift card promotions for several years, which suggest the strategy is an effective way to spur sales of all manner of branded goods, but primarily consumables while at the same time prompting shoppers to visit stores more often than they might have otherwise to redeem the gift cards.

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